A twice-weekly syndicated newspaper column on California public affairs.

Monday, December 7, 2015

VOTERS MAY GET QUESTIONS OF WHAT’S A PENSION, WHO SHOULD GET THEM

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, DECEMBER 25, 2015, OR THEREAFTER

BY THOMAS D. ELIAS
“VOTERS MAY GET QUESTIONS OF
WHAT’S A PENSION, WHO SHOULD GET THEM”

Ballot initiative campaigns don’t
usually center around definitions, but the question of what’s a pension and
what’s not is one battle over definitions that’s very likely to face voters
this fall.

After years of frustration caused
mainly because of failed efforts to change and reduce the pensions that are or
will be paid to past and present public employees, an ex-mayor of San Jose and
an ex-San Diego city councilman now seem all but certain to get their issue to
the ballot.

San Jose Democrat Chuck Reed and San
Diego Republican Carl DeMaio felt stymied last year when state Atty. Gen.
Kamala Harris gave a previous proposal of theirs a tentative ballot description
making it seem unconstitutional because it might have taken existing, vested
benefits from public employees, including police and firefighters. That polled
as so unpopular that the two former public officials pulled back their measure
and opted to try again for next November’s ballot.

Something similar happened to ex-Gov.
Arnold Schwarzenegger in 2005, when he put forward a public employee
pension-cutting measure that would have eliminated death benefits for survivors
of police and firefighters killed in the line of duty.

This time, Reed and DeMaio are leaving
both current employees and death benefits alone. Instead, they now propose putting
new public employees of all types into a 401(k)-style retirement savings plan
guaranteeing fixed contributions from the state, cities and counties instead of
fixed, promised retirement payments based on their pay at or just before the
time they retire. Existing public employees would be unaffected.

If their plan wins, it would
constitute an ironic sort of negative gift for anyone planning to go to work as
a cop, a water or highway engineer, a county social worker or food inspector,
or a host of other vital public functions.

But it still wouldn’t solve the
state’s biggest fiscal problem, the difference between what pension systems are
committed to pay to current and impending future retirees, and the money coming
into the retirement systems from their investments and employee contributions.
That money will have to be made up from state and local budgets, unless stock
market conditions improve markedly, and soon.

This reality, and the high pensions
drawn by some retired public employees, creates resentment among many
Californians. Data released during the fall showed, for instance, that the
average former worker who spent 30 full years with the city of Mountain View
now draws a pension of about $111,000.
Ex-Daly City workers collect just over $97,000 each. And so on, with
many payments exceeding the mean California income of about $53,000.

But these are people who spent a
generation or more in public sector jobs that often paid less than similar work
in private industry. One reason they took those jobs was for the eventual big
pensions they figured to draw.

Retired public employees who spent
less than 30 years on their jobs bring in far less – an average of $26,150 per
year for non-safety employees, or less than half what full-career colleagues
collect.

One quarrel if a Reed/DeMaio measure
qualifies for next fall’s ballot will be whether 401(k)-style savings
accounts really are pensions, or merely retirement benefits. For sure,
while defined-benefit pension payments are guaranteed, 40l(k) values and the
amounts retirees must take out of those accounts after age 69 depend on stock
market performance, an iffy thing at best over the last 10 years.

But Reed and DeMaio stop short of
consigning future public employees strictly to that kind of account. Local
voters could still go for more
traditional pension plans, if workers could convince them that such plans are
merited or that it’s impossible to draw enough qualified public workers for
vital jobs without them.

“We are trying to control the cost of
benefits,” Reed told a reporter. Without a measure like the one he and DeMaio
propose, he said, “The problem is only going to get worse.”

For sure, several polls in recent
years have shown Californians believe public employees deserve decent pensions.
That’s why the question of whether a 40l(k) is really a pension could become
decisive next fall.

-30-
Email Thomas Elias at tdelias@aol.com. His book,
"The Burzynski Breakthrough, The Most Promising Cancer Treatment and the
Government’s Campaign to Squelch It," is now available in a soft cover
fourth edition. For more Elias columns, visit www.californiafocus.net

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About Me

Thomas Elias writes the syndicated California Focus column, appearing twice weekly in 88 newspapers around California, with circulation over 2.2 million.
He has won numerous awards from organizations like the National Headliners Club, the California Newspaper Publishers Association, the Los Angeles Press Club, and the California Taxpayers Association. He has been nominated three times for the Pulitzer Prize in distinguished commentary.
Elias is the author of two books, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It" (now in its third edition; also published in Japanese and recently optioned for a television movie) and "The Simpson Trial in Black and White," co-authored with the late Dennis Schatzman.